Review of the prediction power of Altman and Ohlson Models in predicting bankruptcy of Listed Companies in Tehran Stock Exchange – Iran

Review of the prediction power of Altman and Ohlson Models in predicting bankruptcy of Listed Companies in Tehran Stock Exchange – Iran

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Part of #Review of the prediction power of Altman and Ohlson Models in predicting bankruptcy of Listed Companies in Tehran Stock Exchange – Iran# :

Publishing year : 2009

Conference : 7th International Management Conference

Number of pages : 14

Abstract: Current collapses of large companies and the worst fluctuations of financial markets has raised awareness of stakeholders and mangers to use appropriate tools to predict financial distress of companies. One of such tools is applying financial ratios as independent variables and developing models to predict bankruptcy issues. The objective of this study is to test the prediction power of the original Altman (1983) and Ohlson (1980) models on the dataset of Iranian listed companies and, secondly, by applying Multiple Discriminant Analysis (MDA) and Logit Analysis statistical techniques on the same Dataset, develop a suitable prediction model for bankruptcy of listed companies in the economic environment of Iran. It was finally concluded that both the original Ohlson bankruptcy prediction model in 1980 without any modification of multipliers and coefficients and logistic regression technique showed better prediction results than the original Atman model in 1983 or Discriminat analysis technique.